Everyone kevin here in this video. We're going to talk about one of the the things that i'm using is a core basis for determining. Which companies. Am really excited about adding to sort of a diversified pie of stocks these days and which companies.

Am. I maybe slightly less interested in adding to that kind of diversified pie. Now this is not designed to be guaranteed like this will always hold true. But i think it's really useful for perspective.

And i call it the great stock schism and the reason. I call it a schism is because a schism generally represents a split right a split between one half of let's say people or things and another half. And what i believe that we're facing here is in the macro environment. This recession.

Really of recession of the rich versus the poor and this affects what kind of stocks i think will be likely to have stronger fundamentals not necessarily hold up higher because sometimes you get this divergence between fundamentals and stock price. But consider this for a moment. Who were the people during the covet pandemic. Who really made out like bayonets.

Who really made the most money well think about it you've got on one hand poorer folks who are more often renters and then you have wealthier folks who more often own stocks and own their own homes well one of the beautiful things when we look back at the covet pandemic for the wealthier cohort. Which seems backwards right was this infinite bailout that we got from the federal reserve which propped stocks up in a beautiful v shaped recovery. We also had essentially this blanket guarantee from the fed that don't worry any loans that go bad. We will cover which then led folks and and congress to say you know what let's just provide mortgage forbearance.

You don't have to make payments on your debts. Anymore so people who had debts especially good debts. Didn't actually have to pay those debts at the same time as interest rates plummeted so asset valuations were able to skyrocket so homeowners won with asset valuations going up stocks won with essentially the fed bailing out stocks and stocks going to the moon. But also think about forbearance for a moment on home loans.

If somebody was able to forebear 18 months of two thousand dollar a month payments that's thirty six thousand dollars. Which yeah at some point they have to repay. But you add it to the back of your home loan. Which is basically like not having to repay it because it basically amortizes to virtually nothing.

Which is pretty remarkable that's the beauty about adding things to the back of your home loan renters on the other hand yeah they were able to not get evicted. But in most cases. They still had to pay their rent or pay. It within the next year here you could delay it for 30 to 40 years.

Here. You had to pay within the next year business. Owners or people who owned assets like businesses. They got massive handouts of money not only were you able to get a ppp loan that you didn't have to pay taxes on but you were able to write off that money as an expense.

So you basically got a double deduction here. Which was remarkable and you got free money from the government. Which is also quite remarkable. The renters and poor folks.

Yeah you got maybe a stimmy or you got unemployment. Which was really generous at one point you know the four to six hundred dollar weekly uh numbers is really really remarkable uh. But with the folks with wealth and assets. They're the ones who absolutely made out like bandits in this pandemic and this is a lesson right if you do not own assets your number one goal in in your life should be acquiring assets and building your wealth that way this is some of the most important stuff that we talk about in the programs on building your wealth link down below in the psychology or the strategies around building your wealth with weather stocks or real estate remember we've got that coupon code expiring on july 28th mark your calendar for that 50 off you get direct access to me.

And recently gave out my cell. Phone. Number my personal cell phone number to all course. Members.

And i've been going through some of the messages and boy oh boy. I just have to say really really some nice comments. Take a look at this one 22 year old active duty. Just want to tell you you have helped change my life started following you five years ago.

Became a member in the last year and i retire in two years at five months from active duty. And i will be able to retire retire in large part to you your inspiration for me to invest in myself has helped me. And i hope this success story helps to keep you motivated love you kevin. Thanks man.

What what an amazing comment really shout out to y'all. Especially uh course. Members thank you so much for the kind words. Anyway.

So let's talk about this schism. Now. Because your goal is building wealth. And what do people with wealth do well they spend it and this is where we can get into the topic of this schism that's happening right now in markets.

Because if we look at broad based data. Broad based data like pmis. We can see some things that kind of look scary. Like for example.

This latest pmi read. We had was the worst gauge of business activity since 2020. The covid pandemic any line under this little light blue or i guess. It's kind of like a darker blue right here which i've marked in highlighted red.

Now any time we fall below that which we just did we're falling in contraction with manufacturing. Which should be a good thing for helping inflation move down. But when we look at these composites. It's like oh my gosh things are contracting.

Okay. But this is where i think the schism is so important because see the schism tells us that all right if we have let's say a basket. See here's a nice little basket weave basket and here's a little handle for it and the entire basket is moving down right. It's getting weighted down the nice thing is if we consider a schism and we consider sort of a split in this basket.

We might see that things over here are becoming heavier and heavier and heavier. But things over here aren't really becoming on net heavier. Maybe some things are a little heavier. But a lot of things are still lifting that up and this side here would be the wealthier side.

And this would be the poor side in other words. The poorer folks are having a harder time compared to the wealthier folks. And i want to prove that point and then just mention some takers that i'm at least preliminarily. Looking at for uh.

The potential for uh schism. Based. Investing should we set. So.

The the first thing. That i consider is that the wall street journal. Just ran a very interesting piece where they talked about how consumers at a t are starting to pay their bills two days slower than average and that affected att's cash flow to the tune of one billion dollars yeah in their quarterly cash flow. Now that's because att has so many freaking customers and we you might think to yourself like dude.

What's the difference. If i pay in the 13th or the 15th right you might think that's not that big of a deal. But when a t and t. And mass and millions of people on average are now taking two days longer to pay their bills.

It's a sign that people are starting to get a little bit tighter with their money capital one in their last earnings release told us that customer customer deposits quarter or over quarter were down one percent that's a a beginning of this sort of decline of customer deposits going down now capital one compared to more luxury brands of either credit cards or banks tends to attract lower fico score customers. So you're seeing a little bit more weakness over at banks like capital one versus. Let's say a credit card company. Like american express.

And this is why you're also at at t seeing this slow down you're getting more of exposure to people who are less wealthy. This makes sense. I mean somebody could be really wealthy and have a 150 phone bill somebody can be really poor. And have 150 phone bill.

There's almost like you almost have this equilibrium between poorer and wealthier at 18 t. So when you see the entire sector a slow down. It's like okay. It's probably being driven by poorer folks.

And this is what we're seeing at capital one as well capital. One ceo is telling us look consumers are starting out at a stronger position than compared to prior recessions. You know they have uh their savings rate. Did just fall to below pre pandemic levels.

But their debt service. Burden multi decade low and their cumulative savings over the last two years have been higher. But we're starting to see those headwinds impact the lower end consumers okay this is understandable. This is what we would expect in inflationary environment.

But what we're not expecting is some of the insane spending continuing or at least. We didn't think it would continue and this is where american express blew. My mind and then i'm going to talk again about some specific tickers about what i think about the schism. So american express is just an example of a company that is definitely appealing to hire fico score customers uh and let me write that actually on screen here uh higher fico score customers higher net worth customers and uh even the millennials and the gen z.'s who are using the amex cards usually lower default rates and higher incomes and so one of the things that we noticed from american express is the following spending on airlines.

Which we know there's been some insane inflation at airlines somewhere to the tune of uh. You know 30 to 40 year over year well spending on airlines folks is up 148 that's year over year. So you're definitely seeing a big boom. While we're already out of mostly out of you know sort of reopening last last summer still up 148.

But then we have it's not just inflation. It is much more transactions says the ceo to the tune of the fact that the consumer is spending overall. The amex customer is spending over 30 percent. More right now.

Which is absolutely remarkable. Gen z. And millennial spend is up 48. These are remarkable numbers in a time.

Where the recession fears we're here this entire q2 right all of q2. We had recessionary fears. But what are we getting amex saying dude. Our customers ain't caring about a recession.

Small business spending up from 2019 large corporations are spending more not necessarily compared to 2019. But compared to last year. Delinquency rates well below pre pandemic levels. Extremely strong credit performance amex saying.

You know what we are still spending on ads. Which i thought was bullish for the advertising industry. But also still hiring and i think this isn't like uh binance clickbait. It's actually uh they are still hiring and they're seeing more use of their buy now pay later platform.

Which is pay it planet. Although that seems to appeal more towards their younger demographic. They say. But the big piece of this is really that man american express is telling us we don't know what's going on other than the fact that our customers have more money and they are spending more and because they're spending more we're going to advertise more we're still hiring.

Our millennials and our gen z.'s they're spending. More like crazy. We're not seeing a slow down in travel and entertainment at all if anything these things are booming right now. Which is a different story than if you listen to the nuance of the capital one call or the earnings of att.

Or some of these other companies and so. This is where i want to kind of give you this this bottom line with some tickers here and i want you to think to yourself how does your portfolio uh look in terms of the schism right. So if we have a schism. How is your portfolio divided uh and so let's say.

This is uh just a typical kind of rich versus poor right so uh an example in my opinion and i've said this since even before uh january uh. One of the best plays in my opinion that that and and keep in mind i'm talking fundamentals when i say this fundamental place. When you have recessionary fears even great companies with great finance. Fundamentals can go down in value and bad companies uh with with exposure to a lot of risk can go up when we get risk on rallies.

So sometimes you see these like totally ignorant comments. Where where like i'll make a video. And i'll say hey like here's a risk factor for amazon right and then somebody will write a comment like well amazon is up three percent today guess you're wrong. It's like oh.

My god you just don't get it whatever. But anyway so quick comparison rich versus uh. Poorer here well what are some of these companies been saying this one for a while here obviously tesla. What do we got over here at t.

What do we got over on the poor side carnival cruise lines. But then over here you could have like an n uh clh. I think norwegian cruise lines holdings. Yeah uh norwegian cruella cruise lines appeals a little bit to a higher income demographic.

Right come on folks without a doubt and face amex potentially norwegian. But disney william sonoma. I don't know what their ticker symbol is it's not one that i've invested in yet but whatever uh william sonoma nvidia potentially uh now there's a lot of pressure that's been on companies like nvidia. Though because there's this fear that like there's going to be this big piling up of chips.

Which is probably true. But you wonder how much of that is priced in and then you look at other companies right and these are going to be like your more debt exposed companies hate to say it but like a firm. It is it is going to be more exposed to a riskier cohort of customers and so there's there's obviously a risk. This is why i said you don't want to own a firm in a recession.

I said that since the day. I bought the company and that's why i sold the company. This is one of the companies that you have to trade now. If we get a big risk on rally.

You can make some big money on this or you could lose money quickly. But then again that would be the style of the yolo. Right uh. Verizon is another one over here.

Uh capital. One would be another one so you do get this very interesting schism that's happening. And what i encourage you to do is is i would love for you to leave a comment down below. And say rich companies colon list.

Some poor companies list them as a colon. Let's have a little bit of a debate and argument. I want to see what some of your names are and maybe we'll do some fundamental analyses on these. If you missed.

My fundamental analysis. Y.'all were asking for fundamental analysis. If you just missed. My fundamental analysis on netflix make sure you watch that one as well i think that was a very good video.

But youtube doesn't really seem to love pushing fundamental analysis. But anyway thanks so much for watching we'll see you in the next one i gotta go to some screaming babies goodbye folks.